Dodig says urgent action is needed to help Canadians under 30 weighed down by living costs
Faced with one of the weakest job markets in over two decades, many young Canadians are falling behind on savings needed for future housing purchases.
Canadian Imperial Bank of Commerce (CIBC) CEO Victor Dodig is suggesting a policy response: increase the income tax exemption threshold to $75,000 for those under 30, contingent on saving at least $15,000 in designated accounts.
Speaking at a conference hosted by The Globe and Mail, Dodig said the proposal aims to support Canadians under age 30 who are struggling to build savings. Under his plan, young earners who save a minimum of $15,000 in accounts such as a tax-free savings account (TFSA), first home savings account (FHSA), or other approved vehicles would be exempt from paying federal income tax on income up to $75,000.
According to Dodig, this approach could allow individuals to accumulate between $150,000 and $250,000 in savings over a decade, contributing to a future home down payment. “They’ll save for a home so that when it’s time to buy 10 years from now, they’ll have saved up to $150,000, $250,000 and have money for the down payment,” he said.
Canada’s current income tax system does not adjust for age. The lowest federal tax rate is 15% and applies to taxable income up to $57,375.
On July 1, the federal government plans to lower this rate to 14%, a reduction expected to cost $27 billion over five years.
Dodig said the existing system does not address the financial realities of younger Canadians entering the workforce.
“Young Canadians feel like there’s nothing in it for them, and we need to help them,” he said. He also said that adjusting the tax rate during a person’s early 30s could help address housing affordability issues.
The labour market for younger workers remains limited, with fewer opportunities for stable employment outside of pandemic-related disruptions. Without consistent income, many are unable to meet long-term financial goals such as homeownership.
“People may not like it, but I think it has some merit,” Dodig said of the proposed exemption.
